Friday, July 31, 2009

Wildly Successful Government Program

by dday

Americans have been conditioned by wingnut rhetoric into believing that government cannot possibly work well. I think that ought to be contradicted by the success of the Cash For Clunkers program, which leveraged $4-5 billion into the economy in seven days, got consumers spending again on big-ticket items, and improved fuel efficiency on 250,000 cars well above expectations (preliminary Congressional reports show a 69% increase in fuel efficiency - most people are trading in SUVs with 100,000 miles or more on them for solid passenger cars). The program is working so well that Congress wants to continue it.

Congress is moving quickly to save the depleted cash-for-clunkers program, as the House passed a $2 billion spending measure Friday afternoon that would keep alive a program that has encouraged American car owners to trade in their old gas guzzlers for more fuel efficient vehicles.

Despite some criticism from Republicans who called the legislation another bailout for another industry, the bill easily passed on a 316-109 bipartisan vote.

Under the fast-track bill, Democratic leaders will use funds from a renewable energy loan guarantee included in the stimulus. The bill would extend the program through Sept. 30, 2010. Democrats have portrayed the run on cash for clunkers cash as a great success for the $1 billion program, which allows car owners to turn in older, less fuel efficient cars for a $4,500 rebate to purchase higher gas mileage vehicles.

These are the same Republican stooges who complained that GM and Chrysler were shutting down too many auto dealers (remember how Obama was marking dealers for closure based on campaign contributions?). Now the government designs a program that massively helps dealers, advances fuel efficiency and through investment gets a lot of economic activity going, and they scream "bailout." But if these were tax credits for rich people, they'd be sound measures to induce economic growth. There's also the fact that this is not even new money, but money already in the stimulus package. They're also whining that the dealers haven't been paid yet, even though the program kicked off a WEEK ago. Apparently they all receive their paychecks instantly for all work they perform.

Sadly, too many people see a government program run out of money and think it failed. No, that means demand was so high that it fulfilled its initial purpose in a matter of days. And I see Claire McCaskill rejecting the idea of "subsidizing auto purchases forever." Apparently "forever"=anything more than one week (UPDATED: she's backtracked from that initial rejection now).

We still have a tough economy, mangled by failed conservative policies. The recession has leveled off into something approaching stagnation. And there is compelling evidence that the stimulus package is responsible for even getting us back to the stagnation point (it could have done more if it were the proper size). But by and large, consumers still aren't spending and a lot of people still have no job. Until businesses start hiring again government needs to drive economic activity, which is why you're seeing second stimulus packages proposed in the form of extending measures from the initial stimulus.

Except lots of those extensions revolve around corporate tax breaks and not things that put money into the economy. Things like Cash for Clunkers. And Democrats ought to tell the story that this successful government program, going deliberately and directly to Main Street, represents our best hope for eventual economic recovery.